COMMISSIONER OF GIFT TAX Vs. HANUMANTHAPPA P

JUDGEMENT

(1.) THE Tribunal under S. 26(1) of GT Act, 1958, hereinafter to be referred to as the Act, has referred the following question, viz. : "Whether the gifts in question are liable to be taxed under the GT Act ?"

(2.) THE statement of the case discloses that the assessee (respondent) is an HUF consisting of two brothers, P. Hanumanthappa and Sanjeevappa, who have made certain gifts of immovable properties in favour of their respective sons, some of whom were minors in the year of assessment, i.e., 1958-59, for which the previous year is the year ended 31st March, 1958. THE two brothers purported to have made the said gifts by executing four deeds of gift in favour of their sons. In the return filed by them, in answer to a notice issued under S. 13(2) of the Act it was stated by the assessee that the gifts were inoperative having been made by the father to his sons. THEreafter, a notice under S. 15(2) of the Act was issued but as the assessee did not appear, the GTO completed the assessment under S. 15(5) of the Act, and assessed them on those gifts.

(3.) THE learned advocate for the Department is unable to dispel the basis of the Tribunal's order. It is an elementary proposition that a Karta of an HUF cannot gift or alienate property except to the extent recognised under the Hindu law, namely, for legal necessity or for pious purposes or in favour of female members of the family as long as the property is of a reasonable extent. Further, the partition of a joint family property does not involve transfer, which is one of the essential ingredients of a gift. That partition of a joint family does not involve a transfer is now well settled by their Lordships of the Supreme Court in CIT vs. Keshavlal Lallubhai Patel (1965) 55 ITR 637 (SC), wherein it was laid down that the word "transfer" was used in S. 16(3)(a)(iii) and (iv) of the IT Act in the strict sense and not in the sense of including every means by which property may be passed from one to another; that partition of joint Hindu family property was not "transfer" in the strict sense; that there was no transfer of assets, direct or indirect, within the meaning of ss. 16(3) (a)(iii) or (iv) of the IT Act to the respondent's wife or minor son. It was also observed that the Court is not entitled to say that for the purposes of taxation the actual transaction is to be diregarded as "machinery" and that the substance or equivalent financial results are the relevant consideration.